Workplace Injury Causes and Costs

Liberty Mutual Releases Study on Top 10 Workplace Injuries

Liberty Mutual Group / May 28, 2002

Workplace injuries continue to cost American companies
billions of dollars each year. The 10 leading causes of disabling workplace
injuries account for 86 percent of the estimated $40 billion in wage and
medical payments made to workers injured on the job in 1999, the last year for
which data are available, according to the second annual Liberty Mutual
Workplace Safety Index by Liberty Mutual Group.


Liberty identified the leading causes of disabling workplace
injuries and their associated direct costs using its own data, and findings
from the Bureau of Labor Statistics and the National Academy of Social


Findings from the 2002 Safety Index closely match results
from the company’s 2001 Safety Index. The rank order of the 10 leading
causes of workplace injuries was identical, with “overexertion” and
“falls” being the leading injury causes. The direct cost of
workplace injuries (payments to injured workers and their medical care
providers) rose 3.6 percent to $40.1 billion in the 2002 Safety Index from
$38.7 billion in the 2001 Safety Index. The total financial impact of both
direct and indirect costs (i.e., lost productivity, overtime) is estimated by
the 2002 Safety Index to be as much as $240 billion (results are located at


The results of the study provide valuable information for
the public policy discussion over the call for voluntary ergonomic guidelines
by the Occupational Safety and Health Administration (OSHA).


“The findings of the Safety Index will help in the discussion about the most effective way to improve workplace safety by identifying the top 10 causes of workplace accidents and their direct and indirect costs,” noted Karl Jacobson, senior vice president of Liberty Mutual, who is
responsible for safety and health research and product development. “The
Index provides motivation and a road map to help employers reduce all workplace
accidents including those that are ergonomic-related.”


According to the 2002 Safety Index, the leading causes of
disabling workplace injuries that resulted in employees missing five or more
days of work in 1999 are listed in Table 1.


“Overexertion” and “repetitive
motion” are leading causes of ergonomic-related workplace injuries.


“The study highlights the major injury causes, direct
and indirect costs, and importance of workplace safety, as well as providing
information employers can use to reduce injuries,” said Jacobson.
“The consistency of the findings lends authority and points to the
strength of the study’s methodology. Having two years of similar data
will encourage risk managers and safety directors to use the Safety Index to
focus their safety resources on the major causes of workplace injury, benchmark
their current performance and reduce injuries.” 


Jacobson noted that companies absorb all of the indirect
cost of a workplace injury, while the financial impact of the accident’s
direct cost depends on a company’s specific workers compensation program
(i.e., the level of deductible, 
self-insurance). Each injury’s indirect costs are far larger than
its direct costs. In fact, 56 percent of business executives from a range of
geographic locations, company sizes and industries surveyed by the 2001 Liberty
Mutual Executive Survey of Workplace Safety reported that businesses faced
between $2 and $5 of indirect costs for each $1 of direct costs.


As a result, the $40 billion of direct costs from workplace
injuries identified by the 2002 Safety Index produced $80 billion to $200
billion of indirect costs for a total financial impact of between $120 billion to
$240 billion.


“Workplace injuries needlessly sideline valuable
employees and waste financial resources,” said Gary Gregg, executive vice
president of Liberty Mutual’s Commercial Markets, which provides
commercial insurance coverage to large- and medium-sized companies.
“Improving workplace safety protects employees and helps companies better
manage their financial performance. This is especially important today, with a
recession hurting revenues and profits, and costs, including commercial
insurance premiums, rising.”


The 2002 Safety Index also provides the opportunity for
comparing consistent, quantifiable workplace safety data to qualitative results
from the 2001 Executive Survey of Workplace Safety, which interviewed 200
business executives from a range of geographic locations, company sizes and


Gap Between Perception and Reality

Comparing the results of the 2002 Safety Index with those of
the 2001 Executive Survey confirms a gap between how employers view workplace
injuries and the ranking of the leading injury causes based on their direct
costs. The business community focuses attention on certain causes of workplace
injuries and may need to realign their workplace safety priorities.


For example, in the 2001 Executive Survey, executives
reported “Repetitive Motion” is the most important cause of
workplace injuries. According to the 2002 Safety Index, however, five other
injury causes each produced greater direct costs.


Similarly, executives placed less priority on injury causes
that have greater potential impact. For example, executives reported
“Falls on Same Level” as the seventh most important cause of
workplace injuries, while the 2002 Safety Index ranked this as the second most
costly injury cause.


In addition to this gap, the Executive Survey reported on
workplace safety’s return-on-investment. Ninety-five percent of business
executives report that workplace safety has a positive impact on a
company’s financial performance. Fully 61 percent of these executives
indicated their companies received $3 or more for each $1 spent improving
workplace safety.



The 2002 Safety Index is based on Liberty Mutual’s
claims data and findings from the federal Bureau of Labor Statistics and the
National Academy of Social Insurance.


The first step in developing the study was to apply Liberty
Mutual 1999 workers compensation claims cost data to the workplace injury
frequency information provided by the U.S. Department of Labor’s Bureau
of Labor Statistics for that year.


To broaden the Safety Index, the relative proportions of
each injury type then were applied to national estimates of the cost of workers
compensation benefits from the National Academy of Social Insurance, which
includes information from a broad range of workers compensation insurance

About the Author

Boston-based Liberty Mutual Group is a diversified international group of insurance companies and a multiline insurer in the North American property and casualty industry. The group has more than $50 billion in consolidated assets, more than $13 billion i

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